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Wednesday
Feb292012

Paying for parking again, and again, and again...

We're very thankful to guest contributor Michael Brown for this entertaining and insightful post. If you are an aspiring blogger or have a story to tell that would provide some insights for a Strong Towns approach, please let us know.

I used to work as a municipal planner (or, "zoner") in an area of Florida where there were no buses, no trains and no plausible bike commuting. This was due to geographic constraints, as well as the standard poor design you will find in Florida. The number one site constraint we found (despite our absurdly low Floor Area Ratios, which maxed out at 0.35) was parking. Parking spaces and the necessary landscaping and turning radii to keep those parking lots from becoming unruly dominated site design. Politicians, planners and property owners complained, and we liberalized the development standards as much as we felt we could, but with a lack of legal on-street parking, we felt beholden to the idea of keeping cars on the site they were visiting.

Needless to say, the once intimate "downtown" of that area is now a road to somewhere else, and the streetscape is dominated by parking lots designed to siphon off as many of those cars as possible before they got too far down the road and spent their money elsewhere.

***

I took over management of a 250,000 square foot office building in the northern suburbs of New York City a few years ago. We came to acquire the property because it was challenged. Bank-owned, 40% vacant, not meeting the municipality's parking requirements and unimproved for decades. The facade of the building had that "lovely" 1960's white brick non-descriptiveness.

In a new market for us, we quickly fell behind. Our anchor tenant bought out of their lease and an area-wide downturn in office space dropped rents on clearly superior space to a level equal to ours, which meant that our office space was not competitive in the market. After self-marketing the space for a while, and getting nothing much out of it, we decided to consult with commercial real estate brokers in the area, to try and see what we could do, beyond the obvious, to help lease our spaces.

We heard about our facade, capital improvements, services, cafes, gyms and energy efficiency. But every broker, both those representing tenants, as well as landlords, kept coming back to one issue: parking.

The building had been built by a public utility decades ago and they had implemented car pooling and staggered work schedules (how progressive!) to fully utilize their property. This, coupled with an uncommon proximity to mass transit in the area (1 minute walk to buses, 5 minute walk to express trains) and readily available on-street parking on the road fronting the property, allowed for development of a very large building without the sea of parking you would see today. The building's parking "ratio" when constructed was 1.5 spaces per 1,000 square feet.

Most of the brokers and agents recoiled in horror when they heard this. Were we planning on building a garage? A parking deck? Would we demolish part of the building?

Ignoring those nonsensical suggestions, we put our best progressive ideas to work. Running shuttles to the train station, itself only a 5 minute walk? Mix the uses in the building so that peak parking demand was at different times for different uses? Provide incentives to tenants who committed to mass transit? None of these were acceptable to any agent or broker. For them to market our space, we would HAVE to find a way to accommodate more cars, or else they simply could not conceive of why any tenant would be willingly lease space in a building that was "underparked".

That the commercial real estate brokerage community worships at the alter of the parking space is probably not news. Now I would like to demonstrate how the governing municipality shot itself in the foot by catering to the automobile as well.

***

Our 250,000 square foot office building only had a parking ratio of 1.5 spaces per 1,000 square feet of space. After attempting to corner the low end of the market (due to our perceived "disadvantage"), we eventually found a church that wanted to lease some space from us. After negotiating with the tenant on the business terms of the lease, we mutually approached the municipality (which both taxes and regulates land use) to secure the approvals we might need.

As the attentive reader might assume, we were told that there would be no way that a church could be permitted in our building, despite being a permitted use in our zoning district. Why?

Of course, parking.

Even though the building was substantially vacant (~85%), with acres of parking spaces lying fallow every single day, since the space had been approved as office space decades ago, it could not be converted to a public assembly use because the peak parking demands of a church were greater than those of an office.

Evidently, the municipality (or, more fairly, the municipality's code) was not aware that churches have their peak demands on weekends and evenings, the exact same times as office uses experience their lowest parking demand. By restricting the uses to only what had been approved decades ago, because of a perceived lack of parking, the municipality was keeping the property from evolving with changing market conditions.

This, coupled with our additional challenges covered above, created a vicious cycle of disinvestment by the private sector. Why would any owner invest any money in a badly aging building if they would see no return? One imagines that this is part of the reason that the property changed hands four times in a three year period, and underwent two foreclosures during the same time span.

So we see how a municipality's obsession with parking spaces can cause a cycle of private sector disinvestment. Now we will see how this short-sightedness actually wound up costing the municipality much more in the long run.

***

Losing the anchor tenant and being unable to respond to market changes caused the income of the building to fall drastically. Beyond the challenges this presented to the owners in terms of cash flow, this was also grounds for applying to the courts for property tax relief; our building was not worth as much anymore, and we could prove it!

We found a big law firm that took a portion of the eventual recaptured taxes in exchange for no fee upfront. What we essentially pleaded in front of the Court was that market conditions, and yes, site and municipal constraints, had conspired to the point where our property was no longer worth what it had been, and that our assessment should decrease drastically. A section from the municipality's parking code was one of the exhibits presented to the Court.

Our taxes were reduced from over $500,000 annually to just under $200,000.

The municipality had lost $300,000 annually (and a lump sum of over $2 million for back taxes already paid), money that could have gone towards schools, police, fire coverage, and yes, even the upkeep of unnecessary roads and bridges. Assuredly, some of that reduced amount was due to market conditions. But the Court asked for site plans, parking ratios, existing cash flow and capital needs assessments, all of which showed a massively inflexible, stagnant and losing building, all because of a perceived lack of parking.

A lump sum of $2 million and over $300,000 annually, the cost of worshiping at the alter of the parking space.

***

When permitted in 1959, the FAR of the building was 1.63. Today's current zoning regulations permit an FAR of 0.35, which would permit a 53,361 square foot building. In over four decades, we have managed to reduce the capacity of a site by almost 80%.

The primary motivator of this reduction is the perceived need of having enough parking on the cookie cutter sites imagined in planners' minds. This miniscule permitted FAR can further explain the cycle of disinvestment, abandonment and decay that the site has seen, as any redevelopment would result in a building 1/5th the size of what was built during the Mad Men era.

Is this progress?

***

After receiving some building violations caused by a tenant on an unrelated matter, I attended the municipal court to observe the hearing, the exact same municipal court where our tax appeal had been held. After driving there (my only option), I could not find a parking space on site, and so was forced to park on the side of the road, with approximately 25 other poor souls. As I walked out of the court and maneuvered myself to within inches of traffic on a 55 mph "stroad" that I would be forced to walk along to get back to where I had parked my car, I couldn't help by think that this was the definition of irony.

And then I saw the parking ticket on my windshield.

 

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Reader Comments (5)

It's overwhelming to think that we, as a country, were so quick to adapt to auto-driven codes, yet it is near impossible to un-think them. Great post!

I'd say in today's America a good old fashioned lawsuit would get people's attention. A shame that it would have to come to that, but in order to prove such things are worthwhile you have to hit municipalities where it hurts.

It's also very ironic that so many areas are willing to spend so much time, money, and resources on tax incentives and economic development to improve downtown/business districts without looking at the cause of the problem.

February 29, 2012 | Unregistered CommenterErik

This illustrates a sore point for me: "planner's disease." The inability to even imagine something someone else hasn't done, a mental block against thinking for oneself. As a municipal planner, I face this every day. My state has a listserve where planners can post questions--many of which are downright embarrassing.

In our own downtown, I am pointing to parking lots that were once two- or four-story buildings as evidence of falling property values, as compared with, say, 1920. It's astonishing how hard it is for people to understand this idea. Oh, and we're having severe budget problems. Surprised?

February 29, 2012 | Unregistered CommenterCindy

Why is it the municipality's responsibility to ensure that a non-municipal building has parking in the first place? Why should the municipality care whether someone has a place to park? So at some point someone will drive up in a car, look for a parking space, not find one, and go away. Big deal.

February 29, 2012 | Unregistered CommenterEli Damon

In transit we deal with the same absurd problems with parking. With a backlog of $2 billion in capital improvements, we're willing to help communities finance commuter parking at our stations at the cost of $20,000 per space, in the most recent project. Does this make any sense?

February 29, 2012 | Unregistered CommenterRyan Richter

Here most of the town are not having parking facilities and they are not following road rules and all simply parking some where and go.

March 1, 2012 | Unregistered CommenterOnline chat services
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